Can't delete a folder once it has been navigated to in Explorer

Details

Description

1. Double-click My Computer
2. Browse to C:\
3. Right-click, New, New Folder
4. Default name is fine
(At this point if you delete the folder it works OK.)
5. Double-click to open the new folder
6. Click the up arrow icon to return to the parent folder
7. Delete the new folder
The folder icon disappears as if it were deleted successfully, but:
8. Hit F5 to refresh
The folder is back.

Using rmdir from cmd.exe produces the following output:

ERROR_ACCESS_DENIED - Access is denied.
RD

Deleting the folder again in Explorer results in nothing happening, the folder doesn't disappear even temporarily, however no error message is shown.

After ending the Explorer process with Task Manager, the folder is actually deleted (you don't have to delete it a second time, it's already gone).

Tried a variation using the command line for the initial deletion:

1. Run cmd.exe
2. cd \
3. mkdir test
4. Browse to test in My Computer
5. Go up a folder in Explorer so you're no longer in test
6. rmdir test
No output is produced, as if successful
7. Refresh the Explorer window - folder is still there
8. rmdir test
This time the ERROR_ACCESS_DENIED message is shown.

So there seem to be a few aspects to this:

The delete is not working

Even though the initial delete doesn't work, the OS thinks it does so Explorer removes the folder icon and rmdir doesn't print an error

Subsequent deletes don't show any error message in Explorer even though the icon stays put (indicating that Explorer knows the delete didn't succeed) and rmdir is able to show an error. Explorer ought to be showing an error message at least.